Naperville Area CHamber of Commerce Government Affairs Roundup

The Naperville City Council settled the Home Rule Sales Tax question on Tuesday, March 6. In an 8-1 vote, the City Council agreed to raise the combined sales tax rate to 7.75%, up from 7.5% currently. The new rate is effective on July 1, 2018, but is still scheduled to sunset in two years unless Council takes action to extend it as they did last year.

Mayor Chirico, Councilwoman Anderson, Councilwoman Boyd-Obarski, Councilwoman Brodhead, Councilman Coyne, Councilwoman Gustin, Councilman Hinterlong, and Councilman White all voted in favor of the tax increase. Councilman Krummen was the only vote against the increase. The Naperville Area Chamber of Commerce opposed the increase.

One issue that was brought up during the debate on Home Rule Sales Tax is the Supreme Court case of South Dakota v. Wayfair. This is a case that examines whether or not states can collect tax when someone sells into the state.

This may sound like a very dry and boring issue, but here’s why you should follow this case. Sales over the internet are growing rapidly and are a much larger portion of total retail sales. According to the US Census, internet sales for 2017 were approximately 16% higher than 2016, while total retail sales grew by only 4.4% over the same period. In total, internet sales have grown from approximately 3.75% of all retail spending in 2008 to nearly 9% in 2017.

Meanwhile, the established Supreme Court precedent for the last 25 years is that if a business doesn’t have a physical presence in a state then that state cannot collect a state sales tax. So, the pool of potentially untaxed transactions is growing exponentially while the local rates are rising to furthering the inequity.

If we care to retain local, independent businesses then the playing field needs to be leveled. Oral arguments are scheduled for April 17, 2018 with a decision possible in June. Stay tuned!